Statoil, Norway’s state-controlled oil company, was threatening this week to move some of its operations out of Norway if the government goes through with new tax regulations that would leave Statoil with a much bigger tax bill.
Statoil executives aren’t at all happy with the government’s proposed new rules for taxing oil operations abroad. The government thinks it’s “unfortunate” that Statoil subsidiaries with responsibility for overseas operations can write off the costs of oil and gas exploration overseas, without Norway receiving tax income when the oil and gas fields go into production. Finance ministry officials claimed it would have “great economic consequences” if the rules aren’t changed.
If they are changed, Statoil has now predicted it would get hit with an extra bill of around NOK 2.3 billion (USD 383 million), much more than initially expected. Statoil officials thus feel it would “natural” for Statoil “to look at other ways of organizing relevant operations, to secure our international competitiveness.”
Government officials didn’t seem overly concerned by Statoil’s threat to flag out such subsidiaries and move those jobs overseas. Given the high level of activity in the Norwegian economy, and especially in the oil sector, it’s not, in the ministry’s view, necessary to come up with any measures to counter the threatened flag-out.